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The House’s rejection of the Treasury’s Wall Street rescue plan was a defeat not only for the congressional leaders who backed it but also for the business groups that had urged Congress to act.
The U.S. Chamber of Commerce and National Association of Manufacturers warned lawmakers over the weekend that it would “score” the vote, meaning a “no” vote would affect the ratings these groups give to lawmakers at the end of each legislative session. Groups like the American Trucking Associations and the International Franchise Association said the bailout was necessary to avoid a severe economic downturn.
In the end, though, lawmakers seemed more fearful of the possible retribution of voters than of their financial backers in business, and the push by business — at least for now — couldn’t overcome members’ own doubts about the massive rescue plan. Congressional leaders said negotiations would continue on the package in the hope of a final agreement by week’s end.
“When calls are 1,000 to one against something, that’s a tough thing to overcome,” said one lobbyist with ties to Republican members on the Hill.
The speed at which Treasury Secretary Henry Paulson and Federal Reserve Chairman Benjamin Bernanke pushed Congress to act, and the limited number of participants involved in the negotiations over the bailout bill, also made it difficult for lobbyists to affect the outcome.
In interviews with The Hill the past two weeks, many lobbyists on K Street said they were just trying to keep clients abreast of how the proposed bailout was changing. Several firms were thinking about the long-term ramifications of the financial crisis on Wall Street, reorganizing their own operations into new financial-services task forces in preparation for the coming debate about the type of regulatory structure necessary to prevent another financial meltdown.
Still, many of the business groups that most wanted the bailout to pass couldn’t convince the very people they are the closest to on Capitol Hill — House Republicans — to vote yes, and some contract lobbyists said the push by big business seemed to lack a sense of urgency.
It was a tough sell: lobbying against provisions that appear at least to be consumer-friendly, like empowering judges to rewrite mortgage terms, but for an overall bill that seems like a bailout of rich Wall Street executives who made bets on bad debts.
Apparently, those appearances weren’t lost on groups like the Chamber, whose lobbyists expressed willingness to accept some type of limit on compensation for executives at companies that participate in the government’s rescue package.
Financial-services groups did have a few successes — convincing Treasury to allow foreign banks with significant U.S. operations to participate in the government auction to buy their bad debt, for example.
But the dire warnings in statements and letters and the grassroots efforts that sought to provide real-life examples of how the tightening of credit markets was affecting businesses back home wasn’t enough.
After the House vote, the warnings from business groups seemed to become more explicit.
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